McCrory stresses reserves in 1st NC budget plan

GARY D. ROBERTSON, Associated Press

Published: Wednesday, March 20, 2013 at 3:48 p.m.

Last Modified: Wednesday, March 20, 2013 at 3:48 p.m.

RALEIGH (AP) — Gov. Pat McCrory unveiled his first two-year budget proposal for state government Wednesday, one that's heavy on setting aside money for emergencies, building repairs and Medicaid costs and light on creating new programs.

The new Republican governor recommended to the General Assembly that it spend $20.6 billion in state funds — a 2 percent increase over the current year's budget — in the first year of the plan beginning July 1.

Keeping to his narrative that state government is broken and must be fixed to generate new revenues and help the economy create jobs, McCrory wants $300 million over two years for state building renovations, $180 million to deal with potential Medicaid shortfalls and $77 million for upgrading information systems. Another $400 million would go to the rainy-day reserve fund, which is key in preserving the state's top fiscal rating from bond agencies.

McCrory said at a news conference that now was the time to mend state's fiscal foundation, many of which were exacerbated by the Great Recession and its aftermath.

"We have a strong foundation, but the foundation now has some cracks in it," McCrory said. "And our immediate goal is to fill in these cracks, and fix the cracks, so we can have a stronger foundation for future generations."

McCrory wants $2.7 million this coming year to rebrand and retool the state's economic development strategy and $2 million to consider how to reorganize government. He also said he would fight to restore funding for local drug treatment courts and spend $52 million to add 5,000 slots for preschool for at-risk 4-year-olds. He also wants to give monetary compensation to the victims of North Carolina's former forced sterilization program, which ended in the early 1970s. "I do think now is the time," he added.

Unlike previous governors, he offered no original signature initiative that requires a significant appropriation from the legislature, which will review his proposal and pass its own two-year budget for McCrory to sign.

"This budget funds our priorities, rebuilds our financial reserves and strengthens our foundation for future generations," McCrory said. "Yes, there's some tough decisions within this budget. I didn't enjoy making all of them. But they were based upon priorities."

Those tough decisions, according to McCrory, included recommending that five state prisons be closed — four of them Down East — and eliminating $117 million in public school funding to local districts for teacher assistants for second and third grades. Money would be shifted to hire 1,800 additional teachers.

"We firmly believe that full-time teachers in the classroom — having more certified teachers in the classroom — will improve our education," the governor said. Local superintendents would retain to flexibility to hiring assistants in those grades, he said.

The University of North Carolina system would have to find $110 million in spending reductions across its 17 campuses and at headquarters in the coming year, and an additional $26 million in administrative and instructional efficiencies.

McCrory doesn't want to raise in-state tuition but recommends out-of-state tuition increasing by 12.3 percent at places like UNC-Chapel Hill, N.C. State University and four other campuses, and by 6 percent elsewhere.

"My focus right now is on North Carolina citizens," he said.

The budget proposal lacked details on any tax overhaul package he is seeking but did call for North Carolina's estate tax to be abolished, at a loss of $52 million annually. State employees, teachers and retirees would all get 1 percent salary or benefit raises.

Republicans legislative leaders complimented the proposal. House Speaker Thom Tillis, R-Mecklenburg, said he was particularly pleased to see the $10 million set aside for eugenics program victims. Tillis was the General Assembly's leading champion last year on the issue, which passed the House but was blocked in the Senate.

"We look forward to reviewing the governor's plan in greater detail, and feel confident we will share common ground on many important priorities," Senate leader Phil Berger, R-Rockingham, said in a prepared statement.

State Democratic Party Chairman Randy Voller called the proposal "a status-quo budget that continues to tax the poor to feed the rich." Democrats have opposed efforts to repeal the estate tax.

The governor's proposal also:

— would provide $43 million over two years for digital learning and other technology initiatives.

— spends $63 million to pay for the UNC system's plan to teach skills needed for high-growth job sectors.

— intercepts or accumulates $143 million in reserves or trust fund money for state government operations, including $65 million heading to the Golden LEAF foundation, which receives half of North Carolina's share of national tobacco settlement funds.

<p>RALEIGH (AP) — Gov. Pat McCrory unveiled his first two-year budget proposal for state government Wednesday, one that's heavy on setting aside money for emergencies, building repairs and Medicaid costs and light on creating new programs.</p><p>The new Republican governor recommended to the General Assembly that it spend $20.6 billion in state funds — a 2 percent increase over the current year's budget — in the first year of the plan beginning July 1.</p><p>Keeping to his narrative that state government is broken and must be fixed to generate new revenues and help the economy create jobs, McCrory wants $300 million over two years for state building renovations, $180 million to deal with potential Medicaid shortfalls and $77 million for upgrading information systems. Another $400 million would go to the rainy-day reserve fund, which is key in preserving the state's top fiscal rating from bond agencies.</p><p>McCrory said at a news conference that now was the time to mend state's fiscal foundation, many of which were exacerbated by the Great Recession and its aftermath.</p><p>"We have a strong foundation, but the foundation now has some cracks in it," McCrory said. "And our immediate goal is to fill in these cracks, and fix the cracks, so we can have a stronger foundation for future generations."</p><p>McCrory wants $2.7 million this coming year to rebrand and retool the state's economic development strategy and $2 million to consider how to reorganize government. He also said he would fight to restore funding for local drug treatment courts and spend $52 million to add 5,000 slots for preschool for at-risk 4-year-olds. He also wants to give monetary compensation to the victims of North Carolina's former forced sterilization program, which ended in the early 1970s. "I do think now is the time," he added.</p><p>Unlike previous governors, he offered no original signature initiative that requires a significant appropriation from the legislature, which will review his proposal and pass its own two-year budget for McCrory to sign.</p><p>"This budget funds our priorities, rebuilds our financial reserves and strengthens our foundation for future generations," McCrory said. "Yes, there's some tough decisions within this budget. I didn't enjoy making all of them. But they were based upon priorities."</p><p>Those tough decisions, according to McCrory, included recommending that five state prisons be closed — four of them Down East — and eliminating $117 million in public school funding to local districts for teacher assistants for second and third grades. Money would be shifted to hire 1,800 additional teachers.</p><p>"We firmly believe that full-time teachers in the classroom — having more certified teachers in the classroom — will improve our education," the governor said. Local superintendents would retain to flexibility to hiring assistants in those grades, he said.</p><p>The University of North Carolina system would have to find $110 million in spending reductions across its 17 campuses and at headquarters in the coming year, and an additional $26 million in administrative and instructional efficiencies.</p><p>McCrory doesn't want to raise in-state tuition but recommends out-of-state tuition increasing by 12.3 percent at places like UNC-Chapel Hill, N.C. State University and four other campuses, and by 6 percent elsewhere.</p><p>"My focus right now is on North Carolina citizens," he said.</p><p>The budget proposal lacked details on any tax overhaul package he is seeking but did call for North Carolina's estate tax to be abolished, at a loss of $52 million annually. State employees, teachers and retirees would all get 1 percent salary or benefit raises.</p><p>Republicans legislative leaders complimented the proposal. House Speaker Thom Tillis, R-Mecklenburg, said he was particularly pleased to see the $10 million set aside for eugenics program victims. Tillis was the General Assembly's leading champion last year on the issue, which passed the House but was blocked in the Senate.</p><p>"We look forward to reviewing the governor's plan in greater detail, and feel confident we will share common ground on many important priorities," Senate leader Phil Berger, R-Rockingham, said in a prepared statement.</p><p>State Democratic Party Chairman Randy Voller called the proposal "a status-quo budget that continues to tax the poor to feed the rich." Democrats have opposed efforts to repeal the estate tax.</p><p>The governor's proposal also:</p><p>— would provide $43 million over two years for digital learning and other technology initiatives.</p><p>— spends $63 million to pay for the UNC system's plan to teach skills needed for high-growth job sectors.</p><p>— intercepts or accumulates $143 million in reserves or trust fund money for state government operations, including $65 million heading to the Golden LEAF foundation, which receives half of North Carolina's share of national tobacco settlement funds.</p>